By Chuck Mikolajczak
NEW YORK (Reuters) -Global stocks rose to a record high on Wednesday after U.S. data showed an unexpectedly weak reading on the labor market while British government bond yields surged on growing speculation about the future of the country’s finance minister.
The ADP National Employment Report showed private payrolls dropped by 33,000 jobs last month after a downwardly revised 29,000 increase in May and well below the 95,000 increase expected by economists polled by Reuters.
The data comes ahead of Thursday’s government payrolls report, although there is little, if any, correlation between the two. Also on tap for Thursday are weekly initial jobless claims.
Market expectations for a July rate cut by the U.S. Federal Reserve climbed to just over 27% after the data, up from 20.7% in the prior session, according to CME’s FedWatch Tool.
“Employment softening and inducing the Fed to lower rates would be a positive, but if it softens too much, that would be a negative for growth and profits,” said Jim Awad, senior managing director at Clearstead Advisors LLC in New York.
On Wall Street, the S&P 500 and Nasdaq closed at record highs, buoyed in part by a bounce in Tesla after the stock dropped 5.3% on Tuesday. Tesla shares closed up 4.97% after the electric automaker posted its quarterly deliveries.
The Dow Jones Industrial Average fell 10.52 points, or 0.02%, to 44,484.42, the S&P 500 rose 29.41 points, or 0.47%, to 6,227.42 and the Nasdaq Composite rose 190.24 points, or 0.94%, to 20,393.13.
MSCI’s gauge of stocks across the globe climbed 3.84 points, or 0.42%, to 921.24 after hitting an intraday record of 922.27, while the pan-European STOXX 600 index closed up 0.18%, lifted by renewable energy and luxury stocks.
Longer-dated U.S. Treasury yields rose, with the benchmark U.S. 10-year note up 3.4 basis points at 4.283%.
British government bond yields surged, at one point jumping nearly 23 basis points, the most since October 2022, after finance minister Rachel Reeves appeared visibly distressed in parliament, a day after the government sharply scaled back plans to cut benefits.
The yield on the 10-year government bond, or gilt, was last up 16.8 basis points at 4.621%.
Sterling tumbled 0.83% to $1.3631 after dropping as much as 1.35% and was on pace for its biggest daily percentage drop since June 17.
The dollar index, which measures the greenback against a basket of currencies, rose 0.13% to 96.76 and was on track to snap a streak of nine straight declines, with the euro off 0.03% at $1.1801.
